We are starting a series of publications, Which team's wealth management consultants Individual brokers will help you figure out, how to form a long portfolio and not be distracted by news noise. 1-1st topic - investment risk.
If you pick up comparisons, then the model of successful trading can be compared with the behavior of a hunter, predator or warrior. In his book The Art of War, Sun Tzu notes, that wars are won before, how do they start. Think about, what conclusions can be drawn from this thesis. When applied to trading, this means, that the success of the deal is determined even before the opening of the position by your mental state and the preparation carried out. Maybe, this statement is not completely true, but I believe, that these two factors have a common effect on your success. Also the quoted quote highlights, how important is the first part of a successful trading model - introspection. Continuation : Ten psychological components of successful trading
Do not dial the desired position quickly Do not be quick to gain the position until the campaign goes on, just by the movement. Risk in the stock increases. 3 times better buy then than immediately enter the entire volume. women traders on nyse pictures best stockmarket movies lbr indicator steve cohen trading strategy thinkorswim gadgets best stock market movies
Caring for the trader – a wise and timely to speculate, keeping losses small, be prepared to quickly reach and maximize profits by not staying too long in one place, that is, to the point where he will give more than a small percentage of what has already been received.
Finally, I recovered, you can return to trading. Now I want to tighten my discipline and start trading only according to my trading strategy. Here are some small rules : In the first hour I do not trade and at lunchtime Only according to the trading plan Risk profit 1 to 5 Stop 5-10 cents Potential not less 50 cents Only familiar patterns Only trends Smooth stocks Adequate
This is the old version. One of my first trading strategies, small sketches of trade.(successful) New : NYSE Trading Strategy Main Entry Signals: Break of the previous day's high or low. The stock must break the low 1 day, better more 10 days low or high. There should be a trend on the daily chart and trade only in its direction. Drawing the bottom, in the form of a saucer, stock reversal . The promotion must pass at least 2-3$ from the opening and trading in the afternoon such signals. Centerfold, after a strong rise in the stock and an explosion in volume. Minimum 1$ should grow and begin to rest against the level.
I met a very interesting and useful article in Forex Magazine. I recommend everyone to read and think about their “obstacle course”. Van Tharp is a trading coach. He – автор книги “Trade – your path to financial freedom”, and is also known for its classic correspondence course, helping traders achieve maximum trading results. In any area […]
Recently, the fashion has gone on systems with a very low percentage of winning trades and a very high profit / risk ratio.. This is explained by the fact that, ostensibly, we do not guess the direction of movement, we're just playing our own “положительное матожидание”. Only it is not clear why they decided that they have positive. Understandably, what if the instrument grows or falls a lot all the time, then in this period we will get profit for any trend system and for any profit / risk ratio. here you go, for example, let's take Apple's share (AAPL), which is one of the fastest growing in the American market. With the simplest trend system and minimum stop, we get the ratio of profitable / unprofitable trades 10/90 with a profit / risk ratio 65/1. Believe, the ratio can be made more and less — the system will still make a profit.
but, still need to take into account the fact, that sometimes the break between profitable trades reaches 5 and more years. Think, it will be hard during 5 and receive only losses for more years.
Belief in the system can fade away, and fairly fair, since a profitable deal may not come — the stock may stop rising or falling at the same rate, like how it happened with Microsoft stock — while it was a promising and growing company, stocks were growing very quickly and a lot, but then the company became a giant and there was nowhere to grow, she just stopped.
I think that in real trading, even in forex, even on stocks and futures, the probability of getting a drawdown in 25% over a period of two to four years is quite large and tests of various systems on history also confirm this. For example, in 2008 year, the total drawdown of my systems reached 30%. Yes, you can just look at the systems on Collective, where you can see that the drawdown 25% almost all relatively long existing systems have.
К чему я это?
And besides, what if playing with shoulder 1:4, then in case of drawdown 25% losing all capital. At the shoulder 1:20 we lose all capital in case of drawdown 5%.
I, certainly, understand, what “real trader” drawdown is not recognized at all when playing with the risk / reward ratio 1/10 or 1/20 — that is, it seems to think that the risk is minimal or absent at all. Therefore, this my remark only to those who, due to their non-exclusiveness, drawdowns are still allowed.
True, there is another way to avoid the above risks. — I read that in certain circles day traders make money, not interest, since their (interest) you can't smear it on bread. To them this warning too, Fortunately, не относится. :)
